AWR Derogation Contracts (the Swedish Derogation)

The Agency Workers Regulations 2010 (AWR) came into effect on 1 October 2011. The aim of the Regulations is to ensure that agency workers receive equal treatment in terms of basic working and employment conditions as if they had been employed directly to do the same job.

Many employment agencies seek to avoid the impact of these Regulations by entering into contracts of employment with the temporary staff on their books and then relying on regulations 10 and 11 to claim that therefore they are no longer agency staff. This may work for some agencies but the exclusion has limited effect and an agency seeking to rely on the provisions should be clear that the contracts they enter into do cover the relevant issues.

Regulations 10 and 11 of the Agency Workers Regulations 2010 specify that the Regulations will not apply in the following circumstances:

If the worker has a permanent employment contract, which includes the Contractual requirements referred to below, with the agency; and

That contract was entered into before the assignment was arranged; and

The worker is paid a minimum amount between assignments; the minimum amount must be at least 50% of the basic pay they receive whilst on assignment and not less than the minimum wage.

These are known as derogation contracts. To be clear it is a prerequisite that the agency employ the worker. In this arrangement therefore the worker gains all the usual employment rights.

Contractual requirements

In addition to the usual contractual requirements the contract of employment must include written terms covering:

The fact that the effect of entering into the contract is that the employee will not be entitled to the right to equal treatment on pay under AWR;

the minimum remuneration or the method of calculating that remuneration;

where the agency worker may be expected to work;

the expected hours of work during any assignment;

the maximum number of hours of work that the worker may be required to work each week during any assignment;

the minimum hours of work per week that may be offered to the agency worker during any assignment provided that it is a minimum of at least one hour; and

the nature of the work that the agency worker may expect to be offered including any relevant requirements relating to qualifications or experience.

Derogation applies to pay only

The fact that an agency worker enters into a “pay between assignments contract”, does not prevent them being entitled to other provisions under AWR. They are still entitled to equal treatment in relation to the duration of working time, night work and rest periods, rest breaks and (unpaid) annual leave after the 12-week qualifying period and to the “day one” entitlements with regard to access to facilities and job vacancies.

Other requirements

During any period under the contract after the end of the first assignment, if the agency worker is not working temporarily for and under the supervision and direction of a hirer but is available to do so:

the Agency must take reasonable steps to seek suitable work for the agency worker;

if suitable work is available, the Agency must offer the worker to any hirer who is offering suitable work; and

pay the worker the minimum remuneration for that period.

The Agency must not end the employment contract until it has complied with its obligations when the agency worker is not working for a total of not less than four calendar weeks during the contract.

The Agency must explain the consequences of a permanent contract to the agency worker so that they make an informed choice

When does the derogation not apply?

A zero hours contract is not possible;

If agencies and hirers are thought to have structured arrangements so as to avoid the protection given to workers of pay between assignments this could lead to a legal challenge.

If there is no contract which incorporates the required terms.

This note covers only derogation contracts. If you would like us to draft you a clause to include in your contracts of employment please request a call-back and write in the enquiry details ‘agency workers derogation clause’. We will then contact you, take a credit card payment and e-mail you the draft clause.

Our fees for providing the draft are £35 plus VAT for a standard form draft where you complete the blanks. Our standard clause satisfies the requirements of the Regulations. The fee does not include provision for advice, including advice on implementation or whether such a contract is suitable or appropriate in any particular case. If you would like us to advise you please contact us and we will agree a fee for that advice.